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tv   Worldwide Exchange  CNBC  February 4, 2010 4:00am-6:00am EST

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let's check the cnbc ftse global 300 undecks to see how we are stacking up. 4,363. ross wibt looks like a negative session here in asia. >> despite the fact that we had a positive start, we would turn a little negative here in europe, as well. off nearly 0.5%. xetra dax and cac 40 are a little less than that. smi down 0. 3 1ers pp nicole is joining us. it wasn't going to last, my coal. good morning to you. >> it's not lasting here in the united states. good morning to you, ross, as well. we are looking at the dow trading about 20 points below fair value right now. the market is slated to open a little bit on the lower side after cisco's better than expected earnings. we're hoping to put more life
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back into the tech sector today. but we will take a closer look at that throughout the rest of the morning. ross. >> key russian business and political leaders are meeting at the russian forum in moscow. and there's a whole host of guests and not least of all, we renamed nouriel roubini's name. now he's roubini the realist and steve sedgwick is with him now. >> yeah, absolutely. i'm not sure if he's happy about that title. knew yell roubini, if we named you roubini, the realist, is it work for you? >> i've always said i'm dr. realist not dr. doom. that's how it is. >> and yet the more pessimistic view has been the more dominant one, let's face it from you over the last couple of years. let's talk about russia. are you comfortable with russia? >> well, last year was a disaster.
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however, markets are doing better. the main trouble with russia long-term is that you want commodity economy, oil and gas, and it's an economy where with there's high oil and gas revenues these days are dominant and that's not going to change unless oil prices fall sharply. >> let's go back to some comments. compared with a lot of western nations, unemployment is less, with around 8% budget deficit is less than we're seeing across the european union. they haven't had a b terrible crisis in some of the parameters. some of the parameters are much better than europe, aren't they? >> yes. it depends. the falling output was bigger than the united states or some other advanced economies. their real financial crisis in the banking system in the corporate sector, but the social economic costs were very painful. z let's talk about the key issue, why they haven't managed to remodernize a structured economy.
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i think it's a political economy. they're essentially extracting rent through corruption and otherwise through the high oil revenues. and it's not going to change. still, there is another shock, either a crisis or a collapse in oil crisis or a political shift is going to change in this economic regime. >> do you think that's likely? >> not for the foreseeable future. i think oil prices are going to remain high. the policymakers want to do the changes and some of them are quite levered like minister kutramine and imply that the manufacturing sector in the economy is very inefficient. there's an element of alternative sectors, diversify service sector and things of this sort. >> and yet the economy, it's 60% controlled by the state. if anything, the crisis has brought more state control than
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less state control pup mentioned mr. cooper in there. he talked about a privatization of banks later rather than sooner. would you prefer to see more emphasis on getting it done quickly? >> absolutely so. privatization, less control, less bureaucracy, the sooner you're going to do all of these things, the bad term, i feel, is that the political concern is that these things are not going to happen any time soon. >> mr. roubini, it's very nice to speak with you. >> knew reeel roubini, roubini the realist? >> dr. realist. >> we asked cnbc viewers and that's what they came up with. i'd take it if i were him. now, the ecb is expected to leave rates unchanged. joining us with more is silvia
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wadhwa. i guess mr. trichet will be talking a lot about greece and peripherals. >> yes, absolutely. what is interesting at this ecb meeting and the press conference is potentially, as so often, all the things we're not going to get answers about that is when will they do something about interest rates? we used to not get any answer about that. when will they maybe change their fine tuning scenario on the repos? maybe we get a little bit on that. when and what is their verdict on greece or indeed the possible contamination, in fact, from countries like spain, portugal, what will they say about nobody keeping the criteria of the treaty? it was just said from the german finance minister their budget projects and germany is 5.5% of gdp. 3.5% is within the criteria and
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if memory serves me right, only luxembourg serves that criteria at the moment. we're not going to hear anything about the personnel going on behind the scenes. we're talking about the vice president of the ecb and that in turn might have very much repercussions on who becomes the president of the ecb when jean-claude trichet retires next year. depending who becomes vice president, he might get a different scenario of the presidentship. so far, we've been talking about the governor of italy becoming president. but if we get a different scenario for vice presidentship, we might even end up with a german ecb president. so that will be an interesting scenario, but we ain't going to hear much about it. >> sylvia, we'll check in with you a little later. but for now, thank you. >> ross, joining us now as our guest host for the next hour is
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richard duncan, author of the "corrupt capitalism." richard, thank you for joining us today. you think if we don't continue to get that stimulus, markets are going to crash. don't you think that's a little bit severe? >> no. i think the global economy is on life support. everyone needs to become accustom to that fact. monetary support, but even more important, fiscal support. take the united states, for example. last year, the u.s. gdp contracted by 2%, but the budget deficit was 2% of gdp. had it not been for that budget deficit, it would have been minus 2, minus 12 in gdp, plus a multiplier. so the economy would have contracted by 15%. unemployment would have gone to 20%. it would have been a complete replay of the great depression. this year, we're going to have 11% of gdp budget deficit in the
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united states. without the fiscal stimulus, the u.s. economy and therefore the global economy would collapse. >> how long can governments keep continuing to put in money into the economy? all the stimulus going into the money has come at some cost. sovereign debt issues will come into play. that's clearly not the solution, is it? >> well, there are three things we can learn from japan, three important lessons. when their bubble popped, the japanese economy went on government life support and it has been on life support there for 20 years. policymakers need to understand they're going to have to support the economy for far longer than they would like. it's going to be easier to finance these deficits than people realize. japan has done it. 10-year government bonds are only yielding 2.4%. to restructure the u.s. economy so it becomes viable again s goal because at the root of this crisis is the u.s. economy is
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not viable the way it's currently structured. >> richard, this is nicole lapin in the united states. you're basically saying that the government is to blame, but you also want the government to fix the problem here. so what makes you think that the government mismanagement in getting us into this mess since going to follow us on the way out. >> hi, nicole. the book is called "the corruption of capitalism" because i believe capitalism has been destroyed by paper money beginning in the 1960s. but now that we're here, now that we've had a worldwide credit bubble, as tragic as it is, the only way out is a government-directed investment program to invest in industries of the future so the u.s. can once again be restructured and actually become viable, making rukts that other countries really want to buy that they can't buy anywhere else at any price. for example, a cure for cancer. >> you mean, richard, go up the value chain.
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isn't that what they do in germany? does the u.s. need to become an export nation or there needs to be a balanced economy? >> yes. at the heart of this crisis is the u.s. economy is not viability the way it's structured. manufacturing wages in the united states are up to 40 times higher than wages in china. there's very little that the united states makes that the rest of the world can't buy somewhere else much more cheaply. that is why we develop these trade deficits that destabilize the global economy. now, the u.s. must restructure its economy so that it can make things that other countries want and can't buy elsewhere. and the u.s. government does have the financial capacity and the organizational capacity to invest in high tech industry toes restructure the economy and re-establish american dominance and high tech industries. >> richard, i want to get back to a point you made earlier.
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if you look at japan in the u.s., in terms of debt issuance, most of the debt in japan, public debt, is being held by domestic treasuries where in the u.s. it's held by global treasuries. anything that happens in the u.s. will affect the whole wide world but japan is a little insulated. when you say it's much easier to find in public debt, clearly that's not the case everywhere. >> japan has a high domestic savings rate. but i don't think those are the factors that allow japan to finance these massive budget deficits. when during the bubble years of the 1980s, so many profits were made that when the bubble popped, had those -- the owners of that money, had they not moved it into japanese government debt, that money would have been destroyed because there are no longer any investment opportunities in a post bubble economy. and the corporations had cash flow year after year.
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there was no investment opportunities for that cash flow so they went into government bonds. and that's the same in the u.s. a time of profits have been made. that money is going to be available to finance government debt in the i'd. we had with it at $1.4 trillion budget deficit last year. and 10-year government bonds are only yielding 3.5%. >> richard duncan, we're going to have to leave it there for right now, author of "the corruption of capitalism" and chief economist at landcorp asset management. we appreciate you being with us. let's get to some other stories we're following in the world. cisco reported its first revenues in the year, customers have been buying more routers and other equipment that support the internet. cisco is reporting third quarter revenue growth above analyst estimates.
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the ceo says the economy has entered a second phase of the economy and cisco is firing on all cylinders. >> this next quarter, we're forecasting growth in the 23% to 26% range. we just came off of our best q2 in history in terms of operating income skyrocketing to a new record level. and we saw the balance from india to china to brazil to middle eastern emerging markets to the u.s. to latin america. so very good balance all the way around for cisco. >> cisco plans to hire up to 3,000 people over the next several quarters. checking shares in frankfurt right now, cisco seems to be up about 4.5%. and senate democrats will unveil their jobs bill today, as well. it's expected to include tax credits for hiring and investment in new equipment and incentives for states to wrap up construction projects. the bill would extend some unemployment benefits. charles grassley is urging
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president obama to label china a currency manipulator to spur beijing to raise the value of the yuan. the president said that he also also get tough with china on trade and currency issues just yesterday to ensure a more level playing field for u.s. exporters. there's some tough talk out of washington. >> absolutely. now, investment banking windfall beat forecasts. germany's biggest bank had a net profit of 1.3 billion euros. they also gave us cautiously optimistic outlook. the bank sees a clear trend to recovery and stabilization of financial markets. christine. >> well, ross, it's all about toyota today here in asia. the automakers lifted its full year guidance despite profits, and a recall of 8 million vehicles that has now reached germany. for the year ending in march, the company cut its forecasts to
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about $220 million. that's much smaller than its previous forecast of $3.8 billion. meanwhile, third quarter operating profit came in at a better than expected $2 billion. now to address the braking problem in its best selling prius hybrid vehicle, toyota said it has reworked the car's antilock brake system. ahead of all that, shares fell 3.5% at 3,280, a 10-month low in tokyo. ross. >> still to come on today's program, obama talks tough on china saying it won't tolerate an artificially u.s. but does he have what it takes to change china's position? more on that when we come back.
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okay. it's about 20 past 9:00 in the morning in london. it's a typical gray winter's day that we have here. just down the road, the bank of england is meeting today and the focus will be on whether they extend quantitative easing or not. there is lots of focus on what the ecb may or may not say today. yields just kicked down. that's mainly because equities have turned a little negative. 3.23%. greece very much in focus for that. and the u.s. treasury market
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traded again just as stocks have turned negative, so the yield on that has gone down, 3.69%. it's going to be all about the employment report tomorrow, the treasury market. what about the currency markets? >> i'm sure there's a little bit of caution setting. the nonfarm payrolls report that you mentioned coming out tomorrow. dollar/yen, this is how it's looking. 90.76. euro/dollar, 1.3836. sterling/dollar, 1.5859 and euro/sterling, 0.8723. overall, the dollar is looking mixed today. nicole. >> that's right. christine, as you mentioned, we're getting more news out of the united states. on the labor front today, weekly jobless claims are out sxt 8:30 in the morning new york time, not expected to drop by a total of 460,000. at 8:30, fourth quarter productivity numbers are released with forecasts looking for a 7% rise which could be down from 8.1% of an increase in
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the third quarter. unit labor costs were seeing following by 3.5%. at 10:00 in the morning, december factory orders are expected to rise 0.3%. it is day three of budget talk on capitol hill for treasury secretary timothy geithner. he's in front of the house budget committee again at 10:00 in the morning pp. and kansas city fed president tom hoenig is in kansas city to speak about the economy and monetary policy at 2:00 p.m. hoenig is a voter on this year's fomc. ar foss earnings, we get numbers from the likes of avon, color yo yox, kel using, mastercard and burger king. analysts expect stores to post a fifth straight monthly sails gain thanks to consumers cashing in those gift cards and shapg during those post holiday sales and clearance racks.
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so we're going to get a more concrete look at the state of the ever important u.s. consumer. >> the all-important u.s. consumer, which is obviously with the all-important jobs number. did you have any gift cards that you needed to use up for christmas? >> i'm still waiting for one from you. >> yes. >> did i check the mail? >> just give it a couple of days and then it might be there. thanks, nicole. >> i won't hold my breath. >> no. thank you. great. that's me putting on the spot. now, european stock markets, a little bit negative, a bit like the present i've sent nicole. down on the ftse 100, xetra dak, cac 40 and smi. all the focus is on unilever. >> you've never bought me a single thing. >> i'm very shallow. >> anyway, the markets are down
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in the uk. miners are doing badly today. we're seeing declines for a couple of big companies that are reporting their earnings. u unilever, sales beat expectations in the fourth quarter. but the company is saying that they see continued pressure on consumer spending and the heightened levels of competitive activity in 2010. speaking of competition, they are very much focused on growing their volumes. let's hear what the eoc says about their volume growth ambitions. >> we've done work on the sacrificing price are not what we do. we happen we keep our brands competitive. most of our categories, countries, brands are growing. and our success, if you want to, is across the board. and it's not really one category or another. prices in margin, in deturningents went up about 18%
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to 20% in 2008 and those have adjusted very early on in the year to state stay competitive. but our strategy is unchanged. we just keep our brand competitive. >> so they keep their brands competitive. the shares, though, are down by almost 275%, fwhakt. shell is dropped in their fourth quarter profit of 75%. they have seen a decrease in output and refining margins across the industry. >> there is some up side. vodafone. >> vodafone is the biggest gainer on the ftse 100. the shares of vodafone are moving on the back side of this. they have increased the outlook they had. cost cuts have been helping and they say they see an improving outlook, as well, so already up to a positive session for the shares in that company. >> okay. that's good. thanks very much for that, becky. the smi is around 1.5%.
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zurich financials and banks in focus. >> yes, definitely. as for zurich financial, that is the extent of the gainer here on the smi, up more than 4.5% here. investors here seem to be focussing on that 45% dividends hike. that is just short of a 7% dividend yield. so that is seen very positively by analysts and investors alike. apart from that, the other thing that analysts are focusing on is the strong capital position of the company with shareholders equity up 34% to $29.7 billion. however, when we spoke to the ceo about the outlook for the economic recovery in the second half of this year, he sounded a bit more cautious. >> the western world is still way below potential growth. i do not think that this is going to change in the second half or even into next year. so we will have a continuous
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challenging environment. and i think it's very important to have exactly the strength and to keep the balance sheet power we have for those to make sure that it's going to remain solid as they have in the private area. >> that was martin senn with zurich financial services. with that, i'll send it back to you, ross. >> still to come on today's program, the bank of england will issue today's rate decision.
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this is cnbc's "worldwide exchange." the headlines from around the globe. >> here in asia, toyota earnings, the automaker lifts its full year guidance despite troubles which are expected to total $2 billion. >> in europe, it's a big day for the central banks. we'll see what they have to say on greece and whether there will be any stengs of quantitative easing. >> in the united states, cisco gives investors a lot of good news and a bullish outlook on the global recovery. >> with the ftse cnbc global 300 is off 30 points.
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european markets are on their session lows. plenty to focus on out of asia today, as well, christine. >> plenty. toyota is clearly in focus against japan. guess what? this particular company is lifting its guidance despite the recall problems we've seen. hang seng off 0.1%. the shanghai market is down 0.3%. concerns about new share supplies, further tightening concerns, china trade tensions, all that weighing on greater china. in south korea, this is how the kospi is looking. ending up pretty much flat. there we go. up just one point and the bombay sensex trading down 176% and the aussie market off 0.6%. so overall, markets in asia broadly lower. nicole. >> broadly lower here, as well, in the united states, christine. just in the last half hour, we have seen dow futures go lower,
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below fair value we are looking at the dow, fair value about -- we're 40 below now as is the s&p 500 and the nasdaq. markets are closely watching weekly jobless claims data and productivity on the eve of jobs friday. >> before we get to the jobs, nicole, we have to discuss what is going to happen with the ecb and the bank of england. they're both meeting today. joining us with more on that is jorgen fitzer. jergen, will it be all about the press conference and mr. trichet? i guess he'll get asked a lot about greece. what do you think he'll say? >> i think he will not saying anything in the statement because the ecb tried to avoid any intensification of the debate on greece. but in the press conference, he will certainly be asked tough questions and i think the official statement of the ecb is
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still, of course, that they think there should be no support by other area countries for greece and that greece has to comply with the rules and to say they have to bring the house in order and organize fiscal consolidation. >> what is the end game going to be here? obviously, we've got ireland, spain, portugal pulled into this to a lesser or greater degree. how much will this weigh on the euro? where is it going to end? >> that's difficult to say, of course. but i think we have a quite critical year, 2010, ahead of us as in these peripheral economies and also in ireland. we'll probably see another fall of real gdp this year after quite dramatic downturn in 2009. and this will make it very difficult for these countries and governments to comply with the rules of the stability and growth and to bring their fiscal house in order. this is close to impossible to
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be successful in times of recession. >> okay. let's just get your thoughts, as well, for the bank of england. in some ways, this is going to be the most interesting decision. whether they say that's it, no more qe, or whether they perhaps ask for a facility, let's have a facility for another 25, we aren't going to use it. what do you think they'll do? >> well, i think at the time being they have reached their target of $200 billion pound sterling. and our view is that they will not announce any extension of this program for the immediate future, but they will sirnl not saying that it will stop forever, but leave over the option that if things go back, let's say the recovery will stop or will be too weak that they can restart it maybe later this year. >> thank you for joining us. he's not in frankfurt, but in munich. now, key russian business and political leaders are meeting
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this week in moscow. steve is our man on the ground there. he's been talking on the blogs about the enigma of russia. are you any closer to cracking it, steve? >> reporter: absolutely not. i think if more people i speak to the more confusion one has because some people are in the camp with mr. roubini. basically, the challenges are greater there and others say they are moving ahead diversifying, modernizing. let's get a couple more takes now. i'm joined by ronald kent, head of listings. and this is the deputy ceo of troiker and the chairman of the board at rbs, as well. let's start off with one very big issue russia has had this year. the largest float in january, 2.2 billion u.s. dollars. and your group was part of that listing. >> absolutely. we're very pleased to be part of
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this. we're very pleased to welcome uc russall to the markets. it was a groundbreaker in many ways. it's the first ever concurrent listing on the hong kong stock exchange in this particular offering. and in this tiblg case, the entry point was europe. very successful offering, good trading both in hong kong and in europe since then. >> let me ask you, jack, why is it trading in hong kong and paris? >> i think the russian companies are really big international players. and there is definitely room for russian money and international money. i think for some investors, it's easier to buy some shares. so adr, some order stock exchanges. we hope that this it's going to
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change. we had also very successful changes in moscow, as well. and i think it's good that we have a possibility to do it in russia or out of russia. good for investors. >> there will be other opportunities. but my question is, if we're going to see, and if is a key question, we're going to see more privatization, because the state controls 60% of the economy, are they going to be in russia or on the nyse euro next or where? >> we're going to see in the international stock exchange, in the russia stock exchange at the same time, i think that -- and in international to a certain extent because it will make everybody happy. the international money in the russian investors, as well. some of the places are going to be only in russia. and i think it's political willingness to turn moscow into a winning financial center and part of that is --
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heavy lobbying from your group, i suppose, to keep the momentum rolling and gain more of these listings, as, well. >> i am. and i agree with jjacques. at this stage of their development, it's going to be a pure russian situation but for those that have more global aspirations and an international partnership basis, including yyc euronext is the place to be. i'm here on the back of rusal meeting a lot of clients and potential investors. they're interested in talking about this. >> you guys have been talking about why changes, and of course you guys are going to say everything should migrate to the yse, but is this going to
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happen? is a great way of products going to find its way on to listed products? >> i think it's not only a question of volatility, but it's a question of risk. five years on the balance sheet with a risk, you've got the right approach. we've seen that in the recent past. so i think for purposes, the central counterparty is what we're going to see in the next year. >> high yield debt issuance, is that all about exchanges again? >> if you take a look at the next five years, the sources of capital last time are going to be much smaller in terms of high yield debt and private equity and so on. the exchanges in the public capital. >> jacques, thank you and we appreciate it. back to you guys. >> thanks. a very russian name.
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that one is difficult to pronounce. i mentioned steve's blog. just visit cnbc.com for a quick read. christine. >> there we go. interesting to read there. coming up next on "worldwide exchange," the latest from the toyota press conference. cnbc's tokyo bureau chief will join us live. plus, we'll head live to the singapore air show and speak to luxury jetmaker gulf stream aerospace. it will be an interesting interview. don't go away.
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and welcome back to "worldwide exchange." it's a nice and hot sunny day. 35 degrees celsius, really hot. i was there a couple of days ago and was burnt. we'll cross live to the air show later on. for now, let's check in on tokyo. they have will itted their four year guidance despite problems that caused a recall of 8 million vehicles that has now reached germany.
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for the full year ending in march, the company cut its operating loss forecast to about $220 million. that's much previously forecast loss. ahead of all that, shares of toyota are falling 3.5% today to a 10-month low in tokyo, 3280 japanese yen. toyota has held two press conferences today and kari, can you tell us the latest? >> well, christine, this is a standing room only press conference, back to back two press conferences and one of them trying to detail some of the problems that they've been having with the prius. they received complaints. that's what they announced yesterday, but we now know had something to do with the software. let me explain this because this is technical. when you go over a slippery place or a watery place, there
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is something called the abs, the antilock braking system. and the software that they have in the prius apparently is clashing with the regeneratiive braking system. regenerative braking is a hallmark technology for hybrid technology. this is a crucial component for hybrids and the software is clashing and as a result, they are changing and they have change and modified some of the software in which case customers felt that there was insufficient braking. they say a couple dozen people felt that. but what we don't know is what's going to happen to the other cars out there. there are obviously more than a couple dozen priuss that they sold. here is what they had to say. >> translator: we are considering how we should go about informing our customers. please give us some time and we will reach a conclusion as soon as possible. >> so they didn't say whether this would lead to a recall of the prius. they had give us some more time.
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we're trying to work on it. what we want to know is how long thief known about this is why they didn't tell us soon her if they knew about it earlier. sometime in the fall they got queries about insufficient braking and those numbers of complaints intensified in december and that usually happens because the roads tend to get icy in the northern hemisphere. so there seems to be a timing issue here. there are plenty more out there that own a prius. >> there seems to be criticism out there that toyota sacrificed quality in exchange for market share. did they respond to those concerns? >> partly. let's listen to what another gentlemen said earlier. >> translator: we would not think of sacrificing quality for
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the sake of cutting costs. it would not make economic sense. >> reporter: but the reality of the auto industry is that everyone is trying to cut costs and there are thousands of common parts that go into, say, one car and into another car. so what we really don't know is there are eight on hold right now, but then you have this prius issue, which they're stig still trying to grapple with. and when you talk about software, technically, you would think that the same software is being applied in some of the other hybrid cars, the toyota manufacturers. so we really still don't know and there seemed to be a lot of moving parts, so to speak. so they do say that they're not going to give up on their cost cutting agenda. in fact, they reinforced that at the earnings schedule. but i think the reality is pretty clear that everyone in the auto industry is faced with cost pressures. toyota is no exception. and to do so, they've had parts, they share parts. so we don't really know the full
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extent of this, and especially because day-to-day we keep hearing more news from the company. >> i'm sure this will not be over pretty much. we will continue to hear more of it. thank you very much for covering that story for us. let's cross live to the city and check in with ma keekco asudda. >> reporter: the nikkei 225 ended three days lower. many took to profit taking. investors did react to positive earnings reports, however, which helped trip early losses to the nikkei index. honda motor raised its group operating profit forecast for 2010 by 70% on wednesday. after the market closed, sony announced that it returned to the plaque in the october to
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december quarter, the first operating profit in five quarters. even with the yen weakening, exporters lagged and electronics were among the notable decliners. sharp kep its net operating forecast unchanged at 3 billion yen. the news disappointed many investors who have been buying in expectation of the profit recovery. toshiba lost nearly 4% while tokyo lelctron fell 2.15%. in other news, the sumo champ has retired. that's all from the nikkei business report. >> thank you very much. let's head over to the singapore air show where it's nice and hot. let's get the latest from our reporter, a man on the slow there sri jake raj ya. sri.
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>> thank you, christine. the sun is starting to ease back a little bit. it's hot and sunny outside. but i want to attract your attention to all the tailspins out there. you can see the g150 and the g450. they're all gulf stream jets, of course. i want to talk about the private markets globally. like the broader industry, it has been hit hard by recession, especially in europe and north america. but what central interesting, the reason all these private jets are out here today is because a lot of the growth, a lot of the interest in demand is out here in emerging asia. let's talk more about this and the business segment more broadly. joe lombardo is the president of gulf stream aerospace. joe, good to see you. we saw very weak sales in the fourth quarter hit by the recession. what is your best bet as to when we're going good to see a recovery? >> the predict is we're going to
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have a slow recovery this year and pick up substantially in 2011. so this is really a bridge year for us. we expect a slow recovery this year. >> now, people are bullish about the prospect for sales in the asia pacific region. what proportion of new sales from your perspective of gulf stream aerospace are going to come from asia specifically? >> in general, it's been over 50% of the sales. and the asia pacific region has been a dominant part of that. we have 113 aircraft in our installed fleet here. it's growing. we have airplanes in the backlog. so this is a very, very important region for us. >> joe, when you look at growth and you look at what's going on on the commercial airlines, obviously, they're under a lot of pressure. what is going to be the key driver here for you so that you can keep growing? >> one of the more important things we're doing -- i'll touch
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on, two, one is the development of our products and new technology and always make sure that we're ahead strategically in terms of new product development. we had successfully flown two of our newest airplanes, the u260, the latter part of next year. i think that sends a message that even when the economy was bad and the market was down, we were still substantially testing new products. second is as they markets schaend schand and as we introduce new products into the world, the maintenance, the parts, the people are just as important to make sure that we support these airplanes wherever we reside. >> what is gulf stream doing specifically to compete against
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your rival? >> well, they're all great competitores and they're colleagues of us in the industry. we always have to have performance safety on the mind. and i'll say it again, we've been rated number one in product support the last several years and a couple of the major surveys. and we need to continue to do that because that does distinguish us. >> and specifically your newest jet, so the g-650 and as you turn over to 2012, on schedule, on budget? on schedule, on budget. we're very, very proud of that airplane. >> joe, we've got to leave it there. thank you very much for your time today. that's joe lombardo, president of gulf stream aerospace joining us live on our final day, effort, from the singapore air show 2010. the next show will be in 2012 and we'll be sure to be there,
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christine. >> i hope you had lots of fun, sri. thank you very much for that. great stuff. let's get a final thought now from our guest host, richard duncan. richard, before we let you go, let's talk about this issue of stimulus and double dipping. >> i think the greatest danger to the global economy is the chinese stimulus fading. china's stimulus package has been roughly 30% to gdp. the problem is stimulus is it fades. then they have to choose whether to do that again or to accept much lower rates of growth. maybe they can do it once again or twice again, but it's going to make the economy sick over the long run due to too much capacity. so sooner or later, china is going to have to accept lower growth rates. >> who is going to pick up the slack from here? >> all the governments in the
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world are going to have to continue supporting their economies, unfortunately through fiscal deficit spending. >> does that mean we have to expect a weaker dollar from here? >> over time, the dollar is bound to continue losing value, particularly against gold. >> how weak do you expect the dollar to get? i think we have been seeing a dollar crisis. since 1971, the dollar has lost 95% of its value against gold. it's not going to take another 40 years for its to lose another 95%. >> yeah. richard, the thing with currencies, it's always a battle of the uglies. we can't talk about a weakening dollar. why should it be any weaker against the euro zone with their peripheral problems or japan with its problems?
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>> i think what we'll see in the near term is that china will revalue the asian currencies will move up some, as well, although perhaps not as many. and then in terms of the other currencies yet, that depends on the economy of each country. but they're all pretty ugly. >> when you see china revaluing the currency, how are they going to do it? are we going to expect the one up revaluation? how do you think the china markets are going to carry that out? i suppose it will be as before, as gradually and as slowly as possible. they may surprise us with a one off, but i suppose it will be a gradual trade tension. >> do you think it will be between the china and the u.s.? >> it's also between china and europe. everyone is demanding that china stop manipulating its currency and allow the currency to appreciate, to end the massive global imbalances that have destabilized the world. >> richard, thank you very much
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for popping by and safe journeys and hope to see you soon. >> thank you very much. >> and that was richard duncan, chief economist at blackhorse assets management. nicole. coming up on "worldwide exchange," the economy has entered a new phase, that's the optimistic assessment, at least, coming from the ce of of cisco after better than expected earnings.
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welcome to "worldwide exchange." in the united states, cisco gives investors a lot of good news and a bullish outlook on global recovery. >> here in europe, it's decision day for the central banks with almost zero chance of a change in rates, markets will look to see what they have to say on greece. >> and here in asia, toyota lifts its full year guidance despite recall troubles which are expected to total $2 billion. >> nice to have you with us. welcome to the start of your global trading day. i'm nicole lapin. let's give a look at how u.s. markets are likely to open. the dow is about 35 below fair
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value right now after the dow slumped 26 points yesterday to 10,270. the nasdaq and the s&p futures are below fair value. they have been for the last hour or so after closing lower yesterday, as well. you know, we were, ross, looking for a bit of a bump after cisco's better than expected earnings. but futures don't look that way right now. what about for you? >> yeah. that hasn't followed through, nicole. we're down 0.6% two hours into the trading day. resources and banks are about the only sector losers. vodafone came out today and upped its forecast, so that's where the support is. but it's the weakest sectors dominating right now. christine, how have we done in as asia? >> a lot of caution ahead of the ecb and eob meetings. a lot of caution in the currency markets, as well. this is how the bier is looking. dollar/yen, 90.87. euro/dollar, 1.3847.
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sterling/dollar, 1.5842. and euro/sterling, 0.8738. >> joining us for the rest of the program, steven goal low. the debate rages about whether they'll say that's it, no more qe. whether perhaps they'll be cheeky and say, let's ask for a facility, let's have a 25 billion. we're not going to use it, we just want to have another facility. what happens if they do that? what happens to sterling? >> in the short-term, it is a sterling weakness story if they were to get and do that. we've heard different comments from members of the mpc. mervyn king at the moment seems to be dovish and focused on the level of spare capacity in the uk, very, very weak bank lending, etcetera, etcetera and low risks to inflation and prices over the medium term. at the same time, we have heard
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hawkish comments. and there are members of the mpc who are clearly worried about sterling and any sort of destabilizing force s can have n the uk economy. out of all of the major central banks out there, i think the bank of yemen is probably in the largest buying, though. we've seen a worrying rise in core cpi. i think the highest rate in december is -- >> banks told us to look through that because the spare capacity, it's temporary. >> they've told us so look through it. but the reason i say that they're in a bind is because if they're going to continue with this ultra dovish stance and leave the door open to more qe, the markets could at some point take sterling and run away with it completely in terms of the decline that they've forced in sterling. on the other hand, if they tighten aggressively, because
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they say they need to or because they believe the level of stimulus needs to be withdrawn, they could exacerbate the fiscal risk because of a rise in bond yield. so it's a tricky situation for them, ross. >> although sterling has gained strength against the euro because their problems are seen as quite worse. sylvia joins us ahead of the ecb and the rate decision coming up later. sylvia, what would be the one thing you would love to hear mr. trichet say about greece? >> i don't think i do to say anything because the ecb is firmly out of the bind they were in. they've taken the line so far to say greece will get their house in order. we will not see anything else and i don't think i need anything else because the ecb really more or less is out of the fix because now we know that the eu commission are the ones. the eu commissions basically
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released the ecb out of any responsibility and it's going to be better between the eu essentially and greece or indeed any other countries that might come up in that scenario. so i don't think we will talk a lot about greece and the possible contamination that are in there. it was never just about greece. greece is 276% of gdp. it was never, never had greece itself. it's about is this a lid to pandora's box of troubles or not? of course, when we're talking about the possible pressures and dangers on the euro, we're no longer talking about greece. we're talking about do we have some real skeletons in the closet in spain, in portugal. and let's take a look at the euro zone.
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5.5% of gdp in terms of budget deficits for this year, and it's not going to get better any time soon, so that is i think the danger for the euro. >> sylvia, this is stephen. i think you've got so many people, especially in london trying to talk down the euro and obviously you have so many euro skeptics out there, i think they're missing the angle on this. my angle has always been that this crisis is part of what i call europe's finest hour. obviously, it is a real test for the eu project, it is still in a fragile stage. there are risks out there and as you point out there are contechnology yun fears. does the market's obsessing the fact that this is like a replay of the 1992-1993 crisis is totally missing the angle. at that point in time, you did not have harmonzation of the future and present policies. today, it's clear that all of these politicians, well, most of
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them, anyway, are saying the same thing and saying ultimately, what is this going to do? because there are so many countries in the same situation. it's going to force a massive union as far as, you know, trying to rid these economies from these imbalances, trying to stop these huge fiscal deficits. what are your feelings on those? i find that these calls for euro break up are short sided. how do you feel about it? i imagine the same. >> yes. thank you, thank you, thank you. that is spot on for a number of reasons. first of all, when you say the markets, i think there is a strong element of the angelo american markets in there. for some reason or another, they never believed in the euro project and they always want to talk doom and dmroom the moment there is some crisis in the euro. let's face it, it's here to stay. the euro braeaking apart is -- think it was once said we've got
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about as much shot of breaking up as i have of becoming pope. it will not break apart. what we've had is we've had a ten-year free ride for many of these countries, for greece, for spain, for portugal. it's not a big deal. it's the finest hour. they will begin with the crisis. it will cost us, it will cost the germans, the haves as opposed to the have-nots. that's what you do in a federati federation. germany is used to that. the united states is used to that. the euro, as well, reserve currency number two is there. it's here to stay and maybe at some stage, even though the ecb won't like it becoming world reserve currency number one because it's simply the biggest economic area that it covers. >> stephen, i want to jump in here. this is nicole lapin from the united states. i'm curious, what's your outlook
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for the dollar? the dollar has been trading better, stronger, economic news. is it going to trade on growth expectations over risk? >> that's not in my forecast. in other words, i don't see the dollar benefiting from a positive growth differential between, say, fror example, the united states and europe. the euro being the dollar's main rival. europe has its own problem, but at the same time, americans are -- i have said this over and over and over again. 70%, 75% consumption led model of gdp is broken, it's flawed. so i don't see capital flows. i don't see, you know, strong investor interest like we saw in the late '90s. so i don't see a dollar recovery from that perspective. but i have to say, i am worried about my 2010 bearish forecasts on the dollar. in terms of what we've seen over the last month or so developing in the financial markets, it does look like this dollar
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strength is starting to stick. i wouldn't say we're t point of saturation, but tsd on its way to becoming saturated. it is worrying from the perspective of risk appetite, from the point it does need to be a degree of flight to safety again. there is a premium on the dollar rightly or wrongly. ultimately, still quite bearish on the dollar. medium to longer ter perspective, i think the only direction for that currency is down. it's not a one-way street. buy risk, buy equities, buy commodities and sell the dollar. it's not about that. it's about strategic plays. >> all right. stephen, we're going to have to leave it there for now. do stay with us. we're going to have to say good-bye to sylvia right now. but stephen gallo, head of market analysis for snyder foreign exchange. royal dutch shell has promised to cut further jobs after
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posting a 29% fall in profit. find out more about what other stocks are moving in markets in our global stock watch. eeeee
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on cnbc.com now, today we're in russia looking into the company's debt problems. comments on the enigmatic commercial market and analyses where it's head. and toyota says the largest
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recall in company history will cost $2 billion. plus, after president obama's budget announcement, moody's says the u.s. must do more to preserve its aaa credit rating. all that and much more on cnbc.com. >> and welcome back to "worldwide exchange." before we go on with the show, let's take a look at how gold is trading. right now, spot gold is a little weaker. as you can see, $1103.45 an ounce. the dollar weighs on this yellow metal. as far as crude oil is concerned, nymex light sweet crude -- let's see the boards, as well. $76.35 down 63 cents. and brent is moving lower a
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touch, as well, trading at $75.24 a barrel. ross. >> ahead of the u.s. open, let's find out where we are on global stock markets. we'll kick off with becky who is here from london. >> we are seeing pretty significant declines for each of those. unilever particularly is down by 23%. the ftse 100 is down by 0.7%. unilever results, sales beat expect ages, but the outlook was really negative. the company saying that they see continued pressure on consumer spending and heightened levels of competition throughout 2010. and also declines for shell, that appears to be coming off the lows of the session. shares of shells are lower after the fourth quarter profits dropped. refining had an difficult.
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on the upside, though, vodafone is one of the big gainers on the uk markets. it's worth pointing out that after they beat expectation webs they had cost cuts and see an improving outlook. shares are higher by almost 4%. let's get out to carolin schober to find out what's going on in zurich. >> i don't think car ho lin is quite ready, actually. we'll have a chat. it's interesting, the contrast between shell and bp because bp was down earlier this week. bp comparatively speaking is doing better than shell. >> they say so, i'm sure. bp's shares were down, too, but they seemed to suffer less in that refining business than did shell. but they're facing the same headwinds in both businesses. very much exposed, as well, to the general economic recovery story because clearly, the more convinced that investor are that global recovery is working out,
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the better they'll do. shares are falling because comparatively, things are falling more difficult. $1.2 billion does not a -- >> no. they're still generating a lot of cash. and the same thing, exxon mobil has a similar decline. what's interested is how much more production these guys can get out. becky, thanks very much indeed for that. we are reliably informed that carolin is ready. now over to carolin. >> hi, ross. the smi is down by roughly 0.4%. let's take a look at the banking stocks here. ubs down by 1.7%. julius baer down by 1.85% ahead of that company's earnings. there's continued speculation about the german stolen client data and which bank that is. so that is weighing on the banking sector here. moving on to the watchmakers
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here, richmont and watch group both trading to the downside because we saw weaker than expected swiss watch exports data here. that was down 7.2%. many analysts had hoep hoped for a quicker, stronger recovery here. still, it is an improvement over the previous month here in terms of the regions, experts to china, very strong. up 43%. those in the u.s. are still down 15%. zurich financial, of course, the biggest gainer here after it beat expect ages for its full year and fourth quarter numbers. that's it from here. let's go to christine in singapore. >> hey, carolin. asian stocks were broadly in the red today. everyone is looking for that nonfarm payrolls report out tomorrow, as well, keeping trade cautious. in japan, we had toyota today clearly in focus tumbling to a 10-month low. after the bell, the company raised its annual forecast
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despite its product recalls which toyota says would cost about $2 billion in total. sony is out with earnings. after the close, the electronics giant reported its first profit in five quarters held by a recovery. shares tanked as a result. in south korea, shares added 0.13%. falling shares in banks and retailers putting a cap on some of the gains there. greater china markets looking like this. hit on lingering concerns about beijing's policy tightening. heavy shares supplies, that is weighing on the greater china markets. the hang seng giving up 1.8% there. shares in the world's number four pcmaker, lenovo, trimming losses after posting a better than expected q3 profit. in australia, shares fell 0.3%. meanwhile, miners, they're losing ground as the strong u.s. dollar dragged commodities lower. on that note, let me wrap up the
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stock market wrap and send it back to nicole. >> thanks very much, christine. still much more to come. our guest host, stephen gallo, does not think the current decline of the pound is temporary. we'll ask him why after the break. stay with us.
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welcome back to "worldwide exchange." it is 5:22 in the morning on the east coast of the united states. you're looking at a picture live of the times square right now. we are leading into winter jam. this is where we celebrate all things winter. it's a jamming of the u.s. markets, though. that is the big question. no. markets are hovering lower across the board right now. they're dow is about 40 below fair value right now. the nasdaq and the s&p surged below fair value for the last couple of hours after closing lower yesterday, as well. we were looking, ross, for a bit of a bump after cisco's better than expected earnings, but futures aren't looking that way, at least right now. >> no. still the picture here in europe. meanwhile, key russian and
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business political leaders are meeting this week. we decided to concentrate on the r in the brit common pleas countries and steve has popped over for more. hey, steve. >> hey, ross. i want to concentrate on the industrial side, as well, if i may. we've talked about banking stocks and energy. but the country is trying to diversify. previous state run industries are struggling to invent itself. the president of aptivas joins us now. sir, thank you very much for joining us today. how does the russian car industry restructure itself given that the global competition is so tough in the car industry? >> when we face the severe
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crisis that reflects in the sharp decite of sales. that is much more drastic in europe than in the u.s. so with -- what with the restructuring of our companies with the anti-crisis problems and keeping in mine that we should restructure the technology and reach a new level on technology and the production. we think that we may benefit with the alliances of world manufacturer and the alliances with them. nissan is our strategic partner. we develop our strategic blend and budget for the next years. >> i'm told that that investment
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is now worth a quarter of the original price investment. it hasn't been a renault. do you think you're going to struggle as a country, as an industry to attract more foreign investment? >> yes, sure. the investment was made on the raising market. now the situation is quite different. but we should best now. we should take over the alliance and to use our competitive advantage, our share, and they all we play in the russian market and we have all the opportunities to be successful in the process of restructuring and getting the positions and the levels we had before the crisis together with our strategic partner. >> what reasonable doubt chances a higher car industry will be able to compete not only dmeft cannily but also from an export capacity inspect. >> we think we should use our
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competitive vacs producing low cost car that are convenient and give the advantage of low price with a substantial quality. and we're going to reach the high targets for the quality at the same time. using the advantage of our skill on the russian market and with our strategic partners. and we have focused for this particular segment of the market and we see that if we succeed our plan, we have huge opportunities for exports in the other countries. >> do you think that the firepower given to you by the russian state, also a 25% owner is going to help you make acquisitions overseas to expand your portfolio of products? i know there's been a few question marks about russian sxang in the car industry. >> i think that that is not the
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situation we face now and acquiring other countries. the question now is to make and implement the anti-crisis program, to have expert potential and production on the new level and new opportunities for the development. to reach global standards of the production and after that to our opportunities in acquiring. thank you very much, sir. that was igor comadof talking about the problems faced not ohm in the global car industry, but in the russian case which is trying to restructure itself. back to you, christine. >> steve, thank you very much for that. up next, people buying bonds are destine to be disappointed. find out more after the break. >> and the fourth quarter profits are up 6% thanks to cost cutting. we'll talk more about alternatings season right after this.
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welcome back to "worldwide exchange." i'm nicole lapin. in the united states, cisco gives investors a lot of good news and a bullish outlook on the global recovery. >> and here in europe, it's decision day and central banks have almost zero chance of changing their rates, but what will they say about greece and quantitative easing? >> and here in asia, toyota lifts its full year guidance despite recall troubles which are expected to total $2 billion. >> we'll have you with us here on "worldwide exchange." let's take a look at how the markets are doing. lower across the board right now. the dow is about 35 below -- well, a little bit more, actually, about 40 plus below fair value right now after the dow slumped 26 points yesterday to 10,270. the nasdaq and the s&p futures below fair value, as well, and have been for the last couple of hours, ross. that is what it's looking like across the bond, as well.
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>> yeah. we've been down for most of the session. we started down in positive territory. losses are off just 0.5%. we've got resources and banks for the biggest losers. unilever and shell are down after their figures today. telecom is the only off after vodafone came out better than expected and they raised their forecast, as well, christine. >> a couple of issues are going to impact the currency markets today. we had the nonfarm payroll numbers tomorrow. jobless claims today. right now, the dollar is looking mixed against some of the major currencies. dollar/yen, 90.75. euro/dollar, 1.3855. sterling/dollar, 1.5849. euro/sterling, 0.8738. we have the ecb meeting going on today and that's something investors will happen will be looking out for today, as well. >> and we will be watching. still with us, our guest host, stephen gallo, head of market analysis at snyder foreign exchange.
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thank you to both of you for staying with us. hank, i want to start with you. you and the cisco ceo are pretty bullish these days. is tech going to lead us out again with cisco and oracle? >> gdp growth rates have continued to be ratcheted up and we expect that to continue for a while. so we're bullish because the fundamentals look good. the economy is expanding. and corporate profits, most importantly, as evidenced in this quarter and the past several quarters are improving with 80% of s&p 500 companies reporting so far exceeding earnings estimates and 70% exceeding sales estimates, which is a very high figure. >> you know, hank, we're looking out for retail numbers today, looking pretty rosie for this month. but do you think the spending
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trend will continue into the spring? >> we do. look, it's -- we think the consumer is deaf leveraging. but one thing is you do not want to underestimate the consumer. we have a genetic chip in us that says spend and it is a wrong bet to be perennially bearish on the consumer. >> steve gallo here in london. i think it's quite ironic because i think the last time we were both on the show together you were upbeat on the consumer. i think this is a structural issue in the united states. you know, america's inability to save, the structurally low savings rate in the united states. and i understand that household savings have increased as a result of the recession, but the u.s. is still a huge net borrower and, you know, like you point out, the consumer is in a huge deleveraging process and i think this is a multi year protracted down trend for the
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u.s. consumer. so i just want to know, in the face of what we've been through and the structure of the u.s. economy, where is this upbeat? is it because of stimulus? that's to a degree understandable. although i hope we don't have much more stimulus because i think it's getting out of control. >> ride. there is no question. and that's where you get the new normal, the below average growth rates because of the headwinds of consumer deleveraging, the headwind of the financial system deaf leveraging. but at the same time, you've had tremendous productivity increases of the great eest bac to back productivity increases since the early '60s. the lower dollar is resulting in improved trade. so there are positives out there
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that are fueling the economy, although we would agree that in terms of a recovery and an expansion, it is below historically what we would have seen coming out such a severe recession. >> thanks, this is christine over here in asia. you're bullish in stocks. give us a couple of names that you like. >> sure. is off of the bottom as the market has been driven by lower quality and more economically sensitive companies and we think we are in a transition phase from cyclical companies to more predictab predictable, higher quality companies that so far have, on a relative basis, underperformed. names in the consumer staple areas like procter & gamble and health care like johnson & johnson and abbot labs. and even in technology, higher quality companies like ibm, we would favor at this point.
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>> what about some of the midcap stocks, is it time to get into some of those? >> well, we think that the value right now is in large cap and large cap quality. particularsly if we are going to have a below average expansion. there is going to be a shift to those more predictable companies who are grow earnings regardless of whether the economy is expanding at 2% or 4%. >> thank, just tell us whether you own those stocks personally or company. i just want to ask you this question, as well. we're going to be face ago year where we're going to have liquidity drained out of the system. surely that is going to be a headwind. >> yes, there is no question. but let's remember, monetary
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policy is going to remain accommodative even as they start ta withdraw liquidity. and here in the u.s. as the fed begins raising rates, it's going to be a long while before they get to neutral. >> hank, on those stocks you mentioned, disclosure on those, do you own any of those? >> yes. both the firm and personally we own them. >> great. thanks for that, hank. you're sticking around. we'll get more from you and more from steven coming up in a few moments' time. >> and stay with us on "worldwide exchange." coming up, visa charges up some strong profits in its latest quarter rate. we are going to take a closer look at visa and yummm brands after the break.
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french fries and america's passion for them are legendary. but times change and people want better foods. so cargill helped a restaurant chain create a zero trans-fat cooking oil for their fries, that preserved their famous taste. this is how cargill works with customers.
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fell 1% in after hours today in frankfurt trading slightly lower. ross. yeah. meanwhile, it's all about central banks here in europe, nicole. the agenda, well, that will almost certainly be dominated by greece economic troubles. the president, jean-claude trichet is expected to continue distancing himself from greece's troubles, saying it's a matter for the eu. and we've seen the eu and member states come out with strong messages this week. the euro zone recovery will be
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even. we'll have coverage of the rate discussion and the more important press conference, as well. that will be at 2:30 central european time and it will be on the web a little later, as well. plenty of focus, as well, on the bank of england. it will leave its rates at a low of 0.5%. quantitative easing was due to end, but will they extend it or will it be all over? that will be the big trade for sterling traders and guild traders, as well. there will be coverage of that, as well, at 1300 cet on cnbc. 12:00 london time. now, away from the central banks, there's been a few number of corporates announcing results today. unilever is trading lower 4%. the company said it expects competition to increase this year. this on the likes of ben & jerry's ice cream and dove soap
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had a sales rise of almost 2% in the fourth quarter. but investors are concerned after they said consumers will remain weak. the ceo wasn't entirely pessimistic, though. >> we don't work on sacrificing price or not. what we do is we keep our brand competitive. the good thing now is that most of our categories, countries, brands are growing and our success, if you want to, is across the board. >> well, here if asia, watching toyota, the automaker has lifted its full year guidance. despite problems, it raised a recall of 8 million vehicles for the year ending in march. the company cut its operating loss to about $220 million. this much smaller than its previous forecast of $378 billion. to address the braking problem in its best selling prius hybrid vehicle, toyota has said it has reworked the car's antilock braking system.
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toyota fell 120 yen today to 3,280 yen. sony's operating profit for the october to december quarter came in at $1.6 billion. that's up from a loss of $197 million a year ago. for the full year ending in march, sony upped its last forecast to $313 million. sony had embarked on an aggressive restructuring plan that involved layoffs at its struggling tv unit. checking shares of sony, still losing 2.2% in trade today. ahead of the results, 3,075. >> thanks, christine. plenty of traders will be wondering what the bank of england does with its qe program. stephen is still with us. what's the back drop on the pound?
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>> they're stuck in the middle. a lot of what happens will depend on qe. and obviously, what happens on the fiscal side and on the -- you know, what the results are of our general election, which we expect to come in may. there are a lot of risks for sterling. i'd be very naive to ignore these risks. it could well prove to be a good year for sterling or an incredibly disastrous year. >> currency is always a battle of the uglies, aren't they? particularly in the oecd countries. >> yeah. but we always reward the wrong currency. this flight into the dollar should be something like the flight into cold. you had a guest on before, richard duncan, highly respected. and he's absolutely right. since the end of bretton woods, it's been a downward spiral nor the dollar. but in terms of sterling, from a medium to longer term perspective, my view has always
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been that this decline in the partly cloudy was on a trade weighted basis, versus the euro, vrs the dollar, it's cyclical. and the fact that britain probably will not be able to attract the same positive flows as it has in the past. so structural rather than cyclical. >> 10% by the end of 2011 is my current view. >> thank you for that. stephen gallo, joining us from foreign snyder exchange. "squawk box" is with us in just under 12 minutes. carl is with us to tell us what's coming up, as well. >> we'll get weekly jobless claims at 8:30 a.m. eastern time. our guest host says china is a bubble that's about to burst. jim chanos will tell us how he's playing china now.
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toyota is going down a very tough road, as you know. first the gas pedal recall, now brake design problems with the prius. jeff simonfeld will tell us if toyota is doing enough to get in front of the problem or if it's doing a bad job of damage control. the nation's retailers rolling out sales numbers. we'll get reaction from dana telsey and a squawk exclusive, macy's ceo terry lundgren will be our guest at 8:00 a.m. eastern time. we'll tackle financial reform with congressman paul kanjorski and talk more about those incredible numbers cisco posted last night, find out if we are in this mid ft of the new phase of the recovery. see you in about 12 minutes' time. >> looking forward to it, carl. the countdown has begun, hasn't it? actually, we started counting
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down on monday for the jobs. >> what do you mean? jobs numbers are tomorrow. >> exactly. but how far away did we start the countdown -- >> oh, no, the countdown has been going on since we were kids. it's been going on for years. >> thank you, carl. >> we're on jobs eve. coming up after the break, we'll take a closer look at the trading day on wall street. stay with us.
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welcome back to "worldwide exchange." we get more news on the u.s. labor front today. weekly jobless claims are out at 8:30 a.m. new york time, expected to drop by 10,000 to a total of 460,000. at 8:30, fourth quarter productivity numbers are released with forecasts looking at a 7% rise, which could be down by 0.8% in the third quarter. unit labor costs are seen falling by 3.5%. at 0 o'clock a.m., december factory orders are expected to increase about 0.3%. we bring back in hank smith, cio
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of haverford investments. jobless claims, a lot of occupation for tomorrow, as you know, hank. you say it's a nonnumber. why? >> yeah, we do, because the market has already factored in that jobs are going to be the last economic component to really show any meaningful improvement. and that's not going to be until the second half at the earliest. so unless it's extraordinarily beyond the consensus figure, we don't really see it as being that much of a mover. >> you think the fed will take notice if the ecb tightens? do you think that is going to spur the fed to speed up their timetable? >> no. i think that the fed is clearly focused on jobs and right now, it's in a good position because there really isn't any inflation out there.
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so they can afford to sit tight until at least mid year. we're looking at some point to mid year for the fed to begin its tightening process and it will probably be a she slow process. as i said earlier, probably a long way before we get to a neutral part of the environment. >> obama, president obama vowing to get tougher on china on trade and currency. what do you make of this rising trade tension between the u.s. and china? >> well, christine, we hope it's more rhetoric as opposed to action. clearly, trade protectionism is not good for any economy, let alone the largest economy, the u.s. economy. so hopefully it's just talk and there wasn't be too much action to follow. >> do you expect president obama or the obama administration to do anything to pressure the
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chinese to do something about its currency? >> yes. but in terms of enacting specific trade measures and tariffs, that is not good for our economy. hopefully he will not going down that road. >> jim chanos is going to come on squawk in a few moments and say china is a bubble that's going to burst. he likes shorting markets. do you share that view or at least if you're worried about that risk, how might that impact your investments? >> well, look, the china growth story is for real. at some point, you have to have some hiccups. you can't keep growing at 10%, 12%, 14% a year without dislocations occurring and they probably have a number of dislocates, particularly in their financial system. and you can't also expect to
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give freedom to your citizens and at the same time create a middle class purchasing power and hold back political and social freedoms. so yeah, at some point, there is going to be a correction over there. i don't know if that is imminent or not. >> thank smith, pretty bullish guy this morning. thanks so much for being with us early. cio of haverford investments. let's take a look at how the markets are fairing right now. markets hovering lower across the board, dow futures down 55 below fair value right now after the dow slumped 26 yesterday to 10,270. the nasdaq and the s&p futures below fair value, as well, and have been for the last couple of hours after closing lower yesterday, as well. and that's it for today's show. i'm nicole lapin in the united states. >> i'm ross westgate here in europe. >> and here in asia, i'm
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christine tan. thanks for your company here on "worldwide exchange."
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good morning. toyota tunnels, the automaker says it's biggest ever safety recall will cost it up to $2 billion this quarter. but the company is still raising its outlook. now there are new questions about, yep, the prius, the cheese wedge. cisco connects, the networking equipment giant blowing away expectations and signaling even better times ahead, even adding some jobs. the markets at this hour, u.s.
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equity futures under a bit of pressure as "squawk box" begins right now. good thursday morning. i'm carl quintanilla along with joe kernen on "squawk box." becky is off today. the nation's retailers are going to report january sales throughout the morning. on average, thompson is forecasting same-store gains of 2.5%. sales dropped 5.7% during the same period a year ago. discount stores expected to perform the best. the weakest sector is likely to be teen apparel. we'll see what the numbers bring us later on as soon as they hit the tape. then, macy's ceo, terry lundgren will talk about how the holiday season went now that it's over and what we can look forward to
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in 2010. we were playing walking men because of this picture on the cover of the journal. it's a bronze sculpture, right? >> yes. it's nice. it went for $104 million. not a lot of detail in the hands. they're basically -- i mean, it's good. it's six feet tall. >> it's big. >> it's big. our question was is you have a pile of $104 million and you've got this six-foot bronze thing. what do you put in your car and take home? >> make room for the money. >> it shows you $104 million isn't what it used to be. >> incredible. and your question was what about $10 million for the statue. >> right. and then we timely got down to a gift card at statue of the target. and he took the -- he being rob. >> rob. this is

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